Document 210806

The dark side of open innovation
– how to avoid the pitfalls
Paul Isherwood
13th June 2011
Five common mistakes in open innovation
Not having the right mindset – and/or the wrong
people doing the looking
Not defining the problem correctly – not complete,
not broad enough
Looking in the same places as your competitors do
– consider non-traditional methods
Transactional mentality – it’s about developing the
best relationships, not just the technology
Taking a linear approach to innovation versus a
non-linear one
Source: Beyond Traditional Scouting, Venture2 inc, September 2009
The 5Ps of innovation
Purpose
Performance
People
Process
Partners
Source: Open Innovation in Action, Andrew Gaule, H-I Network, October 2006
Agenda
PURPOSE – why do you need to innovate?
PROCESS – how do you go from concept to launch?
PEOPLE – what roles & competencies are needed?
PARTNERS – how external relationships can help?
PERFORMANCE – which targets & metrics are key?
PASSION – how to raise the probability of success?
External innovation focus is essential
Innovation occurs outside large companies
Recognition of IP in small organisations
Reduced time for taking an idea to product
Increasing competitive pressure
The innovation pyramid
Incremental & breakthrough
OPEN
innovations go together
Varying degrees of risk & return
An innovation pyramid can be
open, transparent & dynamic
Peak of pyramid has ideas with
breakthrough potential
Middle of pyramid is new
opportunity incubator
Base of pyramid ensures
operational excellence
CLOSED
Source: Block-by-blockbuster innovation, Kanter, Harvard Business Review, May 2010
Breadth of innovation
Innovation should be considered in its
broadest view when seeking ideas or input
In an innovation supported growth model,
growth can come from a number of areas:
– Ingredients
– Products
– Packs
– Processes
– Claims
– Routes to market
– Regulatory compliance
All are valid
Industry/market perspective
Industry convergence
– Blurring of boundaries between industries creating new sectors
– eg. nutraceuticals & functional foods
– eg. biotechnology & nanotechnology → “nanobiotech”
Industry differences
– Pharma & chemical - science driven technology intense R&D projects
– Food & drink - consumer focused and often purely market driven
Growth opportunities
– Working in tune with the marketplace not just the technology
– Innovation will be happening at the intersection of the two
Converging technologies & markets
What should companies do if trends of convergence are
affecting their industry?
– Need well established technology foresight activities in place
– Realise that existing resources & competencies may not suffice
– Identify either market or technology-related competence gaps
– Early involvement of partners across different industries is crucial
– Require new industry standards, regulators often lagging behind
Conclusion: companies need to open up!
Source: Stefanie Bröring, Wageningen University in The Future of Innovation, edited by von Stamm & Trifilova, December 2009
Agenda
PURPOSE – why do you need to innovate?
PROCESS – how do you go from concept to launch?
PEOPLE – what roles & competencies are needed?
PARTNERS – how external relationships can help?
PERFORMANCE – which targets & metrics are key?
PASSION – how to raise the probability of success?
The innovation machine
How do companies generate new ideas?
How do they turn those ideas into products?
Sometimes it is wiser to buy than to make it yourself
Four box innovation grid
1
Understanding
the consumer
need
2
Expert
understanding
of the science
3
Finding
technical
solutions
4
Translating
science into
consumer benefits
1. Absolute clarity on articulated & unarticulated needs via
behaviours/habits
2. Detailed knowledge of the “molecule” or therapeutic area
3. Extensive network of internal & external sources
4. Creation of compelling communication eg. new claims
Making the “academic” & economic case
SCIENCE
+
INSIGHT
=
REVENUE
Source: Innovation Stress Points, a research report by H-I Network, www.h-i.com, September 2008
Open Innovation @ GSK
www.innovation.gsk.com
Agenda
PURPOSE – why do you need to innovate?
PROCESS – how do you go from concept to launch?
PEOPLE – what roles & competencies are needed?
PARTNERS – how external relationships can help?
PERFORMANCE – which targets & metrics are key?
PASSION – how to raise the probability of success?
Open innovation team in GSK
OI team are responsible from concept to delivery
Co-located with scientists & marketing in innovation hubs
Timely assessment and development of idea or technology
by key decision makers
Educate
influential
stakeholders
External visibility
for product &
technology wants
Relationship
Management
Earlier project
involvement with
colleagues
Expand & nurture
networks of
partners
OUTWARD FACING
INWARD FACING
Key activities for the OI team
Leveraging OI – Internal
Open
Innovation
Pharmaceuticals
• Neurology
• Anti-infectives
• Oncology
• Respiratory
• Cardiovascular
• Metabolic
• Vaccines
Consumer Healthcare
• Wellness
• Oral Care
• Nutrition
Emerging → Exploratory → Launch
Business
Approval
Product – Development
Commercial – Ideation
External Networks – Search
Packaging – Ideation
Consumer – Insight
Management – Pipeline
Effective knowledge transfer
Product – Research
Commercial – Innovation
External Networks – Build
Packaging – Innovation
Consumer – Communication
Management – Project
Agenda
PURPOSE – why do you need to innovate?
PROCESS – how do you go from concept to launch?
PEOPLE – what roles & competencies are needed?
PARTNERS – how external relationships can help?
PERFORMANCE – which targets & metrics are key?
PASSION – how to raise the probability of success?
Diverse range of external sources
Research
Associations
Types of collaborative relationships
Nature of the relationship
Outsourcing
Arms
Length
Purchase of goods and services
(possibly over the long term)
Type I
Short term focus but co-ordinated
activities and planning between
partner companies
Type II
Longer term focus with integration
activities between partner companies
Type III
Permanent arrangement with partner
companies highly integrated
Alliance
Joint
Ventures
Shared ownership in an operation
with a collaborator company
Ownership
Vertical
Integration
Full ownership of the activity or
operation
Partnership
Closeness of
the relationship
LOW
HIGH
Key enablers to partnering success
The critical areas of the business relationship which
the Relationship Healthcheck addresses include:
–Vision, purpose and objectives
–Collaborative behaviours and mindset
–Cultural understanding
–Clarity of roles, responsibilities and resources
–Leveraging capabilities and strengths
–Governance, process and systems
–Communications
Source: Global Business Partnership Alliance Ltd., http://www.gbpalliance.com/index.html, April 2011
FMCG open innovation forum
Core Forum
Membership
Machinery Manufacturer
Packaging
Raw
Materials
Processed
Materials
FMCG
Producer
Retailer
Consumer
Distribution, Logistics & Waste Management
Support Networks
SMEs
Science Base
Intermediaries
Share best practice & explore hot topics in OI along the FMCG value chain
From source to consumer, flexibility to include related or parallel activities
Participate in bi-lateral or multi-lateral OI collaboration projects
Accelerate OI progress, resolve challenges, create & capture value
Source: IfM’s Centre for Technology Management, University of Cambridge, July 2010
Agenda
PURPOSE – why do you need to innovate?
PROCESS – how do you go from concept to launch?
PEOPLE – what roles & competencies are needed?
PARTNERS – how external relationships can help?
PERFORMANCE – which targets & metrics are key?
PASSION – how to raise the probability of success?
Philosophy on ‘good’ OI metrics
The chosen few (keep focus on critical measures, avoid
temptation to measure everything)
Predictive measures (help predict, not just look back)
Measuring what’s important, not what’s easy to measure
Quantifiable, even if subjective turned objective
–eg. external partner satisfaction ratings
Balance of ‘output’ related versus ‘learning’ related
Source: Venture2 inc, October 2007
External conferences – OI presentations
Open Innovation
Summit date: Thursday 24 November 2011
2010 IMR Conference
Food Hydrocolloids
April 25-27 2010, Berlin
Open Innovation In The
Life Science Sector
Agenda
PURPOSE – why do you need to innovate?
PROCESS – how do you go from concept to launch?
PEOPLE – what roles & competencies are needed?
PARTNERS – how external relationships can help?
PERFORMANCE – which targets & metrics are key?
PASSION – how to raise the probability of success?
Passion is the key!
•
•
Highlights key drivers &
inhibitors which influence
enthusiasm at different
stages of the innovation
process
Promotes the spreading
of enthusiasm from OI
champion through team
& wider organisation
Source: Creativity and
Innovation Management,
Volume 16, Number 3,
pages 265-273, 2007
Passionate behaviour
Generators of passion
–Pass credit to subordinates
–Share blame for mistakes
–Focus on the strengths not the weaknesses
Killers of passion
–Greed, lawyers, conflict policies, committees
–Big egos
–Fights over budgets and responsibility
–Politics (power more important than the right decision)
Source: Soft factors in open innovation, presented by Bernhard Sabel, OI in the Life Sciences sector conference, Barcelona, April 2011
The Preston success formula
Probability of success = Ps
Pa = passion, Q = quality
(t = technologists, m = managers, i = investors)
Ps = (Pat*Qt) * (Pam*Qm) * (Pai*Qi)
Rank each parameter between 0 and 1
All 1s guarantee success
Any 0s guarantee failure
Less important parameters include luck and timing!
Source: John T Preston, Massachusetts Institute of Technology, 2005
Takeout & learnings from today
PURPOSE – why do you need to innovate?
PROCESS – how do you go from concept to launch?
PEOPLE – what roles & competencies are needed?
PARTNERS – how external relationships can help?
PERFORMANCE – which targets & metrics are key?
PASSION – how to raise the probability of success?
Paul Isherwood
Nutrition Category
E: [email protected] gsk.com
T: +44 7920 567660
www.gsk.com
www.innovation.gsk.com